Law:

Section:

Section 48 of the Income-tax Act, 1961 - Capital gains - Computation of - Assessment year 2004-05 - Petitioner, a non-resident shareholder in a private Indian company, entered into a share purchase agreement to transfer all his shares in said company - Sale consideration comprised of fixed amount payable at time of transfer of shares and contingent payments payable in first, second and third year in manner provided in share purchase agreement which was supported by other documents like employment agreement, etc. - Petitioner filed application under section 245Q seeking advance ruling on questions relating to liability of capital gains tax in respect of aforesaid transfer - Respondent-Authority ruled that gains arising from transfer of shares were chargeable to tax under head 'Capital gains'; that such gains would be computed by taking initial lump sum payment as full value of consideration; and that contingent payments, which could be determined at end of first, second and third year, were not, in truth and substance, part of consideration under share purchase agreement and, so, they could not be taken into account in computing capital gains but would be taxable under head 'Salaries' based on employment agreement - Petitioner filed writ petition challenging said ruling, inter alia, on ground that associate employment agreement should not be linked with share purchase agreement - Whether, on factual matrix, it could be said that by construction of two documents, namely, associated employment agreement and share purchase agreement which could not be said to be totally different as one document was interlinked with other, Authority had gone beyond jurisdiction and beyond scope of reference - Held, no - Whether even assuming that Authority had not interpreted associated employment agreement in proper manner, Court, in its writ jurisdiction, could not go into correctness or otherwise or validity or otherwise of finding given by Authority - Held, yes Section 245T, read with section 245S, of the Income-tax Act, 1961 - Advance ruling - To be void in certain circumstances - Assessment year 2004-05 - Whether even though, ruling given by Authority is binding upon party…

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